Authorization for Real Estate Brokers to Sign Contracts

Authorization for real estate brokers to sign contracts on behalf of an investor is a matter of concern for many individuals, businesses, and investors during property transactions. This activity requires strict compliance regarding the written form and the scope of representation between the broker and the client. Establishing the right to sign on behalf of the owner directly affects the validity of civil transactions. The following article by Long Phan Consulting Company will provide a detailed analysis of current legal regulations on this issue. We invite clients to refer to this content.

What is a real estate broker?

Real estate brokerage is a commercial intermediary activity in the real estate sector. According to Clause 2, Article 3 of the Law on Real Estate Business 2023, real estate brokerage is one of the forms of real estate service business. Additionally, Clause 11, Article 3 explains that real estate brokerage acts as an intermediary for parties in buying, selling, transferring, leasing, subleasing, and lease-purchasing real estate. The broker performing this act does not directly participate in the contract as a buyer or seller but acts as a transaction coordinator.

>>> See more: Role of Real Estate Brokers in Land Transactions

Scope of real estate brokerage services

According to Article 62 of the 2023 Law on Real Estate Business, the scope of brokerage services provided by a real estate brokerage company includes:

• Seek out partners who meet the client’s requirements to participate in negotiations and contract signing.
• Authorized representative to handle matters related to the procedures for buying, selling, transferring, leasing, subleasing, and lease-purchasing real estate.
• Providing information and support to parties in negotiating and signing contracts for the purchase, transfer, lease, sublease, and lease-purchase of real estate.

Rights and obligations of real estate brokers

Enterprise Rights (Article 64):

• Perform brokerage; Collect service fees; Request documents/information; Refuse ineligible real estate; Request compensation for damages caused by others.

Enterprise Obligations (Article 65):

• Provide full, truthful files/information and be responsible for them; Organize annual training; Fulfill tax obligations; Compensate for damages caused by their own faults; Report to state agencies.

Individual Practitioner Rights & Obligations: Similar to enterprises, individuals have rights to remuneration/commission (Article 63) and obligations to provide truthful info, pay taxes, compensate for faults, comply with enterprise regulations, and participate in annual training.

Types of contracts that real estate brokers are allowed to sign

Based on Clause 2, Article 44 of the 2023 Law on Real Estate Business, the legal scope of activities for brokerage firms is clearly defined. Accordingly, brokerage companies are permitted to sign certain types of contracts. Understanding these contract types helps clients distinguish the rights and responsibilities of the brokerage company in each real estate transaction.

Real estate consulting and brokerage service contract

Signing Authority: Brokerage companies meeting Article 61 conditions can sign this contract.

Content: Finding partners, supporting negotiations, and authorized representation (Article 62).

Fees: Right to collect service fees and commissions (Article 63).

Conclusion: Brokerage companies are allowed to sign contracts and receive deposits as remuneration/commission for consulting/brokerage purposes.

A deposit contract/agreement for buying, selling, renting, or reserving a place

Signing Authority:

• According to Clause 4, Article 17 of the Law on Real Estate Business 2023, investors cannot authorize other organizations/individuals to sign deposit, sales, transfer, or lease-purchase contracts for housing/construction works/land with infrastructure in real estate projects.
• Therefore, brokerage companies do not have the right to directly sign sales/lease/reservation contracts with customers on behalf of the investor.

Right to Receive Deposit:

• Brokerage companies can receive deposits from buyers only if:
  • Authorized legally by the owner (for non-project individual transactions where allowed); OR
  • Acting as an intermediary money keeper under a tripartite agreement (Buyer – Seller – Broker) clearly stating the purpose, amount, and handover time.

>>> See more: Professional Real Estate Brokerage Service Benefits

Long Phan Consulting Company provides advice on real estate brokerage-related issues

Long Phan Consulting Company Services provides comprehensive legal consulting services to clients regarding real estate brokerage. Specifically, these services include the following:

• Connecting and acting as an intermediary for buying, selling, and leasing real estate.
• Support in listing, promoting, and marketing real estate properties through appropriate channels.
• Providing market information, price trends, and real estate development strategies.
• Consulting services for property management and operation, authorization for real estate brokers to sign contracts, on an authorized basis, for a fee, or under contract.
• Providing support with legal procedures and post-transaction work for real estate.
• Assist in preparing real estate auction documents in accordance with legal regulations.

Frequently asked questions about authorization for real estate brokers to sign contracts

Below, Long Phan Consulting Company provides some frequently asked questions related to authorization for real estate brokers to sign contracts. We invite interested clients to refer to this information:

Can individual real estate brokers act as authorized representatives to conduct lease-purchase transactions for real estate?

Based on the provisions of Article 62 of the 2023 Law on Real Estate Business, the content of real estate brokerage is regulated as follows:

• Seek out partners who meet the client’s requirements to participate in negotiations and contract signing.
• Authorized representative to handle matters related to the procedures for buying, selling, transferring, leasing, subleasing, and lease-purchasing real estate.
• Providing information and support to parties in negotiating and signing contracts for the purchase, transfer, lease, sublease, and lease-purchase of real estate.

Thus, individual real estate brokers are authorized to represent clients in the leasing and purchasing of real estate.

Are individual real estate brokers required to have a professional license?

Based on the provisions of Article 61 of the 2023 Law on Real Estate Business, individuals engaged in real estate brokerage services must meet the following conditions:

• Possess a real estate brokerage license;
• They must practice within a real estate exchange service business or a real estate brokerage service business.

Therefore, individuals practicing as real estate brokers are required to have a professional license.

Are individuals allowed to practice as independent (freelance) real estate brokers?

No. According to Clause 2, Article 61 of the 2023 Law on Real Estate Business, individuals practicing real estate brokerage must have a professional certificate and are required to practice within a real estate exchange service business or a real estate brokerage service business. Practicing independently without going through an organization is against the law.

Can real estate brokers be authorized to carry out property transfer procedures?

Yes. According to Clause 2, Article 62 of the 2023 Law on Real Estate Business, the content of real estate brokerage activities includes representing clients under authorization to perform tasks related to the procedures for buying, selling, transferring, leasing, subleasing, and lease-purchasing real estate. Therefore, brokers can act on behalf of clients to carry out administrative procedures if legally authorized.

Are brokers liable if disputes arise?

Real estate brokers are responsible for the information, documents, and scope of work they provide or perform under the brokerage contract as stipulated in Clause 1, Article 65 of the 2023 Law on Real Estate Business, amended and supplemented in 2024. In case of disputes arising from intentional fault or professional error of the broker, the broker may be liable for damages as stipulated in Article 131 of the 2015 Civil Code and the agreement in the contract. Conversely, brokers are not responsible for issues outside the scope of the services committed to.

Conclusion

To ensure safety and understand about authorization for real estate brokers to sign contracts, clients need expert companionship. Controlling signing authority is a prerequisite to avoid invalid contract disputes.

Long Phan Consulting Company is ready to support clients in handling all obstacles related to real estate transactions. Please contact Hotline 1900636389 for direct advice.